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Currency in GBP
Last close As at 09/06/2023
GBP0.48
— 0.00 (0.00%)
Market capitalisation
GBP70m
Research: TMT
Centaur’s FY21 results are ahead of our forecasts, showing 21% revenue growth and adjusted EBITDA margin of 16.4%. This constitutes good progress towards management’s MAP23 goals for FY23 revenues of £45m and adjusted EBITDA margins of 23%, both of which should be achieved under our modelled scenario, despite potential headwinds of rising costs. Iterative improvements in the client offering and a greater emphasis on cross-selling underpin the forecast top-line growth, funded from the cash-positive balance sheet. The valuation remains at a marked discount to peers.
Centaur Media |
Targeted connectivity |
FY21 results |
Media |
16 March 2022 |
Share price performance
Business description
Next events
Analyst
Centaur Media is a research client of Edison Investment Research Limited |
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Centaur’s FY21 results are ahead of our forecasts, showing 21% revenue growth and adjusted EBITDA margin of 16.4%. This constitutes good progress towards management’s MAP23 goals for FY23 revenues of £45m and adjusted EBITDA margins of 23%, both of which should be achieved under our modelled scenario, despite potential headwinds of rising costs. Iterative improvements in the client offering and a greater emphasis on cross-selling underpin the forecast top-line growth, funded from the cash-positive balance sheet. The valuation remains at a marked discount to peers.
Year end |
Revenue |
PBT* |
EPS* |
P/E |
EV/EBITDA |
Yield |
12/20 |
32.4 |
(0.3) |
0.2 |
N/A |
13.6 |
1.1 |
12/21 |
39.1 |
3.0 |
1.9 |
23.2 |
8.0 |
2.3 |
12/22e |
43.9 |
4.5 |
2.4 |
18.3 |
6.3 |
2.3 |
12/23e |
47.0 |
7.0 |
3.4 |
12.9 |
4.8 |
3.2 |
Note: *PBT and EPS are normalised, FD excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Encouraging signs at Flagship 4
The Flagship 4 brands within the group (Econsultancy, Influencer Intelligence, MW Mini MBA and The Lawyer) have all made progress in building their market position. Econsultancy’s revenues were up 22% over FY20, outstripping pre-COVID-19 levels, with blended learning solutions the main new business driver. Influencer Intelligence had a difficult period as brands tempered their spend on influencer marketing, but this rebuilt as FY21 progressed, giving better momentum into FY22. The MW Mini MBA had a very strong year, with nearly 7k delegates taking courses, up 44% on the prior year. The Lawyer’s financial performance was restrained by the transition of Market Reports to the subscription Signal product. Recovering recruitment and events revenues and good renewal rates give momentum into FY22 in both The Lawyer and the XEIM segments.
FY22 forecasts unchanged, new FY23
We have left our FY22 forecasts unchanged, as we see some previously expected progress being achieved ahead of schedule. We nevertheless anticipate double-digit revenue growth and an uplift in adjusted EBITDA margin from 16.4% to 18.5%, moving towards management’s FY23 objective of 23.0%. Our new FY23 forecasts show revenue of £47m, a little over the original MAP23 target and representing 7% year-on-year growth. After a very strong year for cash conversion, we anticipate more moderate accumulation in FY22, with year-end forecast cash of £15.2m.
Valuation: Overstating the execution risk
In common with many peers, Centaur’s share price has fallen since the start of the year, having performed very strongly in FY21. Despite the scale of the recovery in financial performance and good growth prospects, the shares continue to trade at a marked discount to quoted B2B media peers on EV/EBITDA (averaged over FY21–23). If this discount were to close, the shares would be priced at 76p (January: 66p, uplift from the roll-forward of year), 72% above the current level.
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Exhibit 1: Financial summary |
|||||||
£m |
2019 |
2020 |
2021 |
2022e |
2023e |
||
31-December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||
Revenue |
|
|
39.6 |
32.4 |
39.1 |
43.9 |
47.0 |
Other operating income |
1.6 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Cost of Sales |
(9.4) |
(7.3) |
(10.9) |
(12.5) |
(12.3) |
||
Gross Profit |
30.2 |
25.1 |
28.3 |
31.4 |
34.7 |
||
EBITDA |
|
|
4.0 |
3.8 |
6.4 |
8.1 |
10.8 |
Operating profit (before amort. and excepts.) |
|
|
(1.2) |
0.0 |
3.2 |
4.7 |
7.2 |
Amortisation of acquired intangibles |
(2.5) |
(1.5) |
(1.1) |
(0.5) |
(0.1) |
||
Exceptionals |
(4.0) |
(0.3) |
0.0 |
0.0 |
0.0 |
||
Share-based payments |
(0.1) |
(0.5) |
(0.5) |
(0.7) |
(1.0) |
||
Reported operating profit/ loss |
(7.8) |
(2.3) |
1.6 |
3.5 |
6.1 |
||
Net Interest |
(0.3) |
(0.3) |
(0.3) |
(0.3) |
(0.2) |
||
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
(1.5) |
(0.3) |
3.0 |
4.5 |
7.0 |
Profit/ Loss Before Tax (reported) |
|
|
(8.1) |
(2.6) |
1.4 |
3.3 |
5.9 |
Reported tax |
0.6 |
0.9 |
0.1 |
(0.7) |
(1.5) |
||
Profit After Tax (norm) |
(2.0) |
0.3 |
2.8 |
3.7 |
5.2 |
||
Profit After Tax (reported) |
(7.5) |
(1.7) |
1.4 |
2.6 |
4.4 |
||
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Discontinued operations |
9.4 |
(12.7) |
0.0 |
0.0 |
0.0 |
||
Net income (normalised) |
0.4 |
0.4 |
2.8 |
3.7 |
5.2 |
||
Net income (reported) |
1.9 |
(14.4) |
1.4 |
2.6 |
4.4 |
||
Average Number of Shares Outstanding (m) |
143 |
144 |
145 |
147 |
147 |
||
EPS - normalised (p) |
|
|
(1.4) |
0.2 |
2.0 |
2.5 |
3.6 |
EPS - normalised fully diluted (p) |
|
|
(1.4) |
0.2 |
1.9 |
2.4 |
3.4 |
EPS - basic reported, continuing (p) |
|
|
(5.3) |
(1.2) |
1.0 |
1.7 |
3.0 |
Dividend per share (p) |
1.5 |
0.5 |
1.0 |
1.0 |
1.4 |
||
Revenue growth (%) |
(2.5) |
(15.6) |
20.6 |
12.2 |
7.1 |
||
Gross Margin (%) |
76.3 |
77.5 |
72.2 |
71.5 |
73.8 |
||
EBITDA (IFRS) Margin (%) |
10.1 |
11.7 |
16.4 |
18.5 |
23.0 |
||
Normalised Operating Margin (%) |
(3.0) |
0.0 |
8.2 |
10.8 |
15.3 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
67.4 |
52.3 |
49.6 |
48.0 |
45.8 |
Intangible Assets |
61.2 |
46.1 |
44.3 |
43.3 |
42.9 |
||
Tangible Assets |
4.3 |
3.3 |
2.5 |
2.5 |
2.4 |
||
Deferred tax |
1.4 |
2.4 |
2.5 |
1.7 |
(0.1) |
||
Other receivables |
0.5 |
0.5 |
0.3 |
0.5 |
0.5 |
||
Current Assets |
|
|
19.7 |
14.3 |
19.3 |
21.8 |
25.6 |
Stocks |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Debtors |
10.3 |
5.8 |
6.1 |
6.5 |
6.4 |
||
Cash & cash equivalents |
9.3 |
8.3 |
13.1 |
15.1 |
18.9 |
||
Other |
0.1 |
0.2 |
0.2 |
0.2 |
0.2 |
||
Current Liabilities |
|
|
(23.3) |
(17.7) |
(21.1) |
(20.8) |
(21.6) |
Creditors |
(12.5) |
(8.7) |
(11.4) |
(9.8) |
(9.9) |
||
Tax and social security |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Short term borrowings |
0.0 |
0.0 |
(0.0) |
(0.0) |
(0.0) |
||
Other/ Lease liabilities |
(10.8) |
(9.0) |
(9.7) |
(11.0) |
(11.7) |
||
Long Term Liabilities |
|
|
(2.7) |
(1.6) |
(0.6) |
(0.6) |
(0.6) |
Long term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other long term liabilities, including leases |
(2.7) |
(1.6) |
(0.6) |
(0.6) |
(0.6) |
||
Net Assets |
|
|
61.1 |
47.2 |
47.1 |
48.4 |
49.1 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
61.1 |
47.2 |
47.1 |
48.4 |
49.1 |
CASH FLOW |
|||||||
Op Cash Flow before WC and tax |
4.5 |
(0.0) |
6.4 |
8.1 |
10.8 |
||
Working capital |
2.1 |
(1.0) |
3.2 |
(0.8) |
0.8 |
||
Exceptional & other |
(2.0) |
3.1 |
(0.1) |
(0.4) |
(0.6) |
||
Tax |
0.1 |
0.0 |
0.0 |
0.0 |
(1.5) |
||
Operating Cash Flow |
|
|
4.7 |
2.1 |
9.5 |
7.0 |
9.6 |
Capex |
(1.6) |
(0.8) |
(0.8) |
(1.3) |
(1.5) |
||
Acquisitions/disposals |
16.3 |
0.1 |
0.0 |
0.0 |
0.0 |
||
Net interest |
(0.2) |
(0.1) |
(0.1) |
(0.3) |
(0.2) |
||
Equity financing |
(0.6) |
0.0 |
(0.3) |
(0.3) |
(0.3) |
||
Dividends |
(7.1) |
0.0 |
(1.4) |
(1.5) |
(2.1) |
||
Other |
(2.2) |
(2.2) |
(2.1) |
(1.7) |
(1.7) |
||
Net Cash Flow |
9.3 |
(1.0) |
4.8 |
2.0 |
3.8 |
||
Opening net debt/(cash) |
|
|
(0.1) |
(9.3) |
(8.3) |
(13.1) |
(15.2) |
FX |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
(0.1) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
(9.3) |
(8.3) |
(13.1) |
(15.2) |
(19.0) |
Source: Company accounts, Edison Investment Research
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Research: TMT
In Q421 Arcane Crypto reduced its EBITDA loss to SEK3.4m from SEK10.4m in Q420, on the back of higher trading volumes and the gross margin of its crypto broker Kaupang Krypto, as well as the launch of bitcoin (BTC) mining in October 2021. The latter is now fully ramped up after deployment of the second batch of miners in Q122. These operations generated a robust average gross margin of 65% in Q421. However, the subsequent BTC price decline from its all-time high in November 2021, coupled with high electricity prices in Norway, means Arcane Crypto now expects to be close to cash flow neutral in the near term (compared to previous expectations of being cash flow positive from Q122 onwards).
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